INSY Stock Hits All-Time Low On Bankruptcy’s News

INSY stock is having the worst day after Insys Therapeutics Inc. (NASDAQ:INSY)’s warning that the company was seeking bankruptcy protection after losing millions of dollars in legal payments.

Chapter 11 Expected

On Friday after the market closed, the company stated that at the end of the first quarter it had cash and cash equivalents of around $87.6 million and $240.3 million in liabilities. The company also said that it was not in a position to finalize the $150 million settlement it was supposed to make for illegal marketing of Subsys.

In a press release released Friday, May 10, the company said that it was in a situation where its ability to continue is a growing concern. The company is likely to file for bankruptcy liquidating all its assets and in the process; INSY stock investors may lose part or all of their investment in the company. However, the company has not stated when it will file for Chapter 11 with no guarantee that they will follow it through.

The announcement is seen as the start of the end of the Arizona based opioid maker. At the beginning of this month, four former executives and the founder of Insys John Kapoor were guilty of engaging in racketeering activities where they bribed doctors to prescribe Subsys and then deceiving insurers to cover their shady dealings.

INSY stock tumbled to its all-time low of $0.82 earlier in the session. At the time of writing, the stock is down 74.16%, selling at $0.93.

INSY Stock Affected by Growing Legal Costs

The company is also settling legal expenses under an indemnity agreement that requires Insys to cover defense, investigation, settlement as well as appeal related expenses of the former managers and Kapoor. In 2018 the company said that it had spent $28 million already in Kapoor’s defense.

On Friday, INSY’s officials stated that indemnity defense expenses have increased to $25.7 million in Q1 2019 up from $10.3 million last year. The cost includes the over $18 million paid to Kapoor’s lawyers for his defense during the trial.

Last year, the company agreed to a $150 million settlement related to the Subsys probe but it’s unlikely that the company will fulfil that obligation as a result of declining cash reserves.

STOCKS YOU MAY LIKE

In the wake of the coronavirus pandemic, biotech stocks have been of interest to investors, given that they’re some of the top gainers in the past few weeks. In particular, low float biotech stocks have …

Those new to investing in the stock market tend to focus on large cap companies instead of small cap ones. However, Maria Ohle explains that there are plenty of reasons why one should consider investing …

In 1992, Congress passed the Prescription Drug User Fee Act (PDUFA), which allows the US Food and Drug Administration (FDA) to collect fees from drug manufacturers to fund the drug review and approval process. The …

2019 is almost over, and while some investors are reflecting on a successful year, others are scrambling to add value to their portfolio before the year wraps up. If you didn’t capitalize on the stock …

Despite starting the year off strong, biotech stocks have had a rough summer. The recent weakness in the biotech sector is causing biotech exchange-traded funds (ETFs) like the VanEck Vectors Biotech ETF (BBH), the iShares …

Small cap stocks can be on the riskier side of investing; smaller companies can offer greater risk for sure, but sometimes, even greater reward than big cap companies. One small cap stock has received a …

Small-cap stocks are generically valued somewhere between $300 million and $2 billion. As such, they are smaller companies, usually in the earlier stages of a business life cycle. Because of this, there is a greater …

Small-cap stocks are inherently far riskier than large-cap stocks. This is due to many factors, but in general, the lower the price of a share, the more vulnerable it is too short selling, sudden dips, …